I think it's plainly obvious by reading the comments that the vast majority of Slashdotters would only ever use DVD X Copy for backing up a DVD that they already own. They would not use it for, say, renting a DVD from Netflix and making a copy for themselves, as many of my friends do regularly. Then again, almost everybody I know who uses Kazaa uses it to download and share copyrighted material without the holder's permission, so perhaps I'm hanging with the wrong crowd.
Making backups of your media is a good idea, in case they're damaged or stolen. But not even factoring in the cost of the DVD burner or the blank media, the basic version of DVD X Copy retails for $69.99. That's the cost of three DVDs.
I must own over a hundred DVDs, and not once have I had a DVD go bad or otherwise become unusable. I would have to have had three instances of this happening in order for a purchase of DVD X Copy to have been worth the investment.
If I regularly loaned DVDs to friends and three ended up not coming back, the software would have been a good investment, but it would have been more efficient to be more careful in whom I loan my DVDs to.
It seems to me that the most logical way to get your value's worth out of DVD X Copy is to use it for piracy. Just as most people use Kazaa illegally and most people who buy equipment for getting free cable or satelite signals also do so to avoid paying, rather than for "test purposes" or "for educational use only" as the ads proclaim, my bet is that most people who use DVD X Copy do so illegally.
Thank you for being honest. I know several people who do the same. I'd have to guess that this is the primary application for DVD X Copy; while some people really do use it to make backups of stuff they own, it's similar to the people who use Kazaa only to download music from unsigned bands and shareware. Or people who buy cable descrambling equipment just to save on equipment rentals.
"Anybody who thought this lawsuit would accomplish anything other than making a few scumwad lawyers rich was a naive fool."
On the contrary, it was extremely successful -- people just don't understand why the suit came about, and what it meant.
Due to the success of the suit, the record companies are no longer allowed to set MAPs, and Wal-Mart and Best Buy are now free again to run ads for CDs at loss-leading prices. It wasn't about what price that stores were able to sell at, but about what prices they could advertise. The record companies set MAPs to protect smaller retailers. It all transpired a couple of years ago and the checks are just now being mailed.
The biggest effect of this action is that Wal-Mart and Best Buy will continue to dominate the retail market for CDs, because they can afford to sell CDs at margins that smaller stores simply cannot support to survive. This action is great news for the Wal-Marts and Best Buys of the world, and great news for consumers, as long as they buy from stores like Wal-Mart and Best Buy. It's not-so-good news for specialty retailers, ranging from the Tower Records chain (who were busted along with the record companies and have recently filed for bankruptcy), to the indie record stores. Wal-Mart can afford to sell a CD for $10.99 or $11.99 because they'll make the money back on the other stuff you'll buy while you're there. Your favorite local indie record store cannot.
Not to sound overly dramatic, but if your favorite local indie record store has gone out of business or is on the ropes, the results of this price-fixing lawsuit may have a lot to do with it. Enoy your $13.86, folks. See you at Wal-Mart.
"They've only won one for the continuing death of middle-class businesses and made another step towards a world where you're either a huge corporation or a rightless consumer. People are generally too stupid to understand that it's in the long term bad for them if they buy at Wal-Mart. Markets have to be regulated in some way."
Very astute. But many Slashdotters are getting their $13, and perhaps we didn't need specialty retailers like Tower Records anyway, when we can just go to Wal-Mart and get our (edited for our protection) CDs and our underwear at the same time. Plus, as a bonus, it's perceived by many commenters as a victory against record companies (when in reality the record company makes about the same no matter what store they sell to). It's a bit like a few years back when we all got the $300 "tax refund" and people were practically wetting themselves. Those who saw the big picture and the possible long-term effects of the country spending money it doesn't have were often derided as spoil-sports.
"Come on, kids, this is a no-brainer.
As Steve and Phil told us at the very beginning, and as reality has proven - THERE IS NO MONEY IN SELLING DOWNLOADABLE TRACKS."
Steve Jobs said that Apple is not making money on iTunes. This is a very long stretch to "there is no money in selling downloadable tracks." There are tons of variables:
iTunes is still in startup mode. Lots of startups don't turn a profit for months or years. There are development costs and launch plans which are one-time spends. Frankly, if Steve Jobs had said that the iTMS was profitable in its first year of launch, after seeing their ad spend, I would have been quite shocked.
We don't know what Apple's ad budget is compared to other online services. Perhaps they are erring on the side of over-spending because they are not they are not relying on iTunes to be a profit center. Few people outside of Apple know this.
We can't assume that the current cost per sale is a constant.
And a bunch of other stuff we can't know, and assumptions we can't make.
"Startup with massive launch budget declared to be not profitable" is hardly news. Stretching this to declare that the business has no hope is relying on too many unknowns.
"Why would HP deal with Napster? Song distribution does not bring any money. In fact, Apple claimed (in an old article on TheRegister.co.uk; sorry for no URL) that their iTunes online store did not bring any profit."
I think people are extrapolating way too much from Jobs' statement. When he stated that they were breaking even on iTunes and making the bulk of their money on the iPod, lots of Slashdotters have assumed:
That he was being fundamentally truthful (ie. not counting the entire iTunes/iPod ad campaign expenses as an iTunes expense, or similar shifting of numbers which companies do all the time)
That this is to be a permanent situation -- that is, that iTunes, unlike many other new businesses, doesn't have a bunch of startup costs like development and advertising which will go down over time, and that their cost of sale will remain constant (ie. they are not expecting fees paid to the record companies to every go down).
That the profit and expense model of any other given music download service is fundamentally identical to iTunes -- that is, the other vendors are spending the same amount on advertising, have spent the same amount on development and other startup costs, and make the same margins and have the same costs per sale.
Those who've run a business know that these are groundless assumptions. Extrapolating "song distribution does not make any money" based on a statement that Jobs made about Apple's own unique business many not be accurate.
"I bought about 200 CDs during the time when they were convicted for price fixing and over charging by up to $5 per CD. So, having been robbed of $1,000 in late 1990's dollars, I am offered $13.86 in 2004 dollars. Woo fucking hoo."
There's a lot of misunderstanding of what happened here. A lot of people think this has to do with the margin that the record companies charged channel-wide. Reading the original article does provide some of the details, but it doesn't cover everything. I posted the below as a response to another message but I think it bears repeating. The article covers the basics: also named were Tower Records, TWE and MusicLand. Why just those three?
Set the way-back machine to the early days of the 21st century...
The big box stores (Best Buy, Wal-Mart, etc.) started selling CDs at little or no profit as an incentive to bring customers into the store (where they'd presumably also buy a high-margin item at the same time).
Smaller vendors and specialty vendors -- Tower Records and the other chains eventually named in the charges -- as expected, freaked out and complained to the record companies.
The record companies starting using a mechanism (already common in many other industries) called MAPs, or Minimum Advertised Prices. Retailers who sold their wares had to agree to not advertise CDs below a certain price -- they could sell them for any price they want, but not advertise them. This was done to help protect the specialty retailers (again, read: Tower Records, etc.) who didn't have a metric buttload of high-margin CE devices in the back of the store and thus couldn't slash prices on CDs as a draw.
The big box retailers complained to the government.
The record companies stopped doing MAPs. Meanwhile, lots of other merchandise in your local Best Buy is sold with a MAP arrangement -- the difference is that nobody's complained to the government. Yet.
Specially retailers who can't compete on price continue to go out of business. For example, Tower Records has filed for bankruptcy.
Putting this in black-and-white terms for/. readers, in this case the "bad guys" were the record companies, as well as TWE, Tower Records, and MusicLand, who originally complained to the record companies regarding unfair competition from the big box retailers. The "good guys" are Best Buy, Wal-Mart, and the other large retailers who used CD sales as a little-or-no margin incentive to bring customers into the stores. I am generally not a fan of Wal-Mart and its business practices, but in this case, they've won one for the free market economy.
The price fixing affected what you paid if (a) you bought those 200 CDs Tower Records, MusicLand, etc. who kept their prices high in a (sometimes successful) effort to stay in business. If, like many other people, you shopped around for the lowest price, then it's less of an issue.
By the way, if a manufacturer sells an item into the distribution channel for a fixed price (for CDs, it tends to be around $8), if the retailer marks it up by 10%, 20% or even 100%, it does not affect how much the original manufacturer made when they sold it to the distributor. I'm not privy to the price that record companies sell in to Wal-Mart vs. specialty retailers, but the price difference between stores is often more about the store's profit margin, not the manufacturer. For the record companies, this was less about how much they made per CD, and more about protecting their retailers, so that they could ultimately sell more CDs.
I think it's time for some background on the price fixing situation. I think a lot of people commenting on this story have a misunderstanding of what happened:
The big box stores (Best Buy, etc.) started selling CDs at little or no profit as an incentive to bring customers into the store (where they'd presumably also buy a high-margin item at the same time).
Smaller vendors and specialty vendors -- Tower Records and the other chains eventually named in the charges -- as expected, freaked out and complained to the record companies.
The record companies starting using a mechanism (already common in many other industries) called MAPs, or Minimum Advertised Prices. Retailers who sold their wares had to agree to not advertise CDs below a certain price -- they could sell them for any price they want, but not advertise them. This was done to help protect the specialty retailers (again, read: Tower Records, etc.) who didn't have a metric buttload of high-margin CE devices in the back of the store and thus couldn't slash prices on CDs as a draw.
The big box retailers complained to the government.
The record companies stopped doing MAPs. Meanwhile, lots of other merchandise in your local Best Buy is sold with a MAP arrangement -- the difference is that nobody's complained to the government. Yet.
Specially retailers who can't compete on price continue to go out of business. For example, Tower Records has filed for bankruptcy.
If I understand your post correctly, I think you're of the understanding that the record companies conspired to keep prices high channel-wide, thus it is ironic of them to be suing people for copyright infringement.
Regardless of record industry profit margins, channel programs such as MAPs, and so on, they have the same right to protect their investment that you and I do. I run a business myself, and (like most business owners I know), I charge the highest price that the market will bear. Whether I am simply being "greedy" or I am indeed trying to provide the best life I can for me and my family is an issue open to debate, but by following this practice, I haven't forfeited my legal or moral right to protect my intellectual property any more than a record company or any other business has. If somebody copies my code, steals from me, tries to cheat me, and so on, I'll kick their ass right proper using any legal means available. My profit margin has absolutely no bearing on this.
"I purchased well over 50 CDs in my lifetime. I get back $13? From my quick calculations I feel that I should be getting back about $300 instead."
Only if you bought all fifty at TWE, Tower Records or MusicLand, and you haven't bought any CDs in the past two years. If you've largely bought the CDs elsewhere, the price fixing didn't affect you.
"I figure that CDs should be no more than $6.00/ea (before tax) so I should get back at least 50% of the money I spent."
Do you think it's possible to be profitable selling a CD for $6.00? CDs are sold into distribution at about eight bucks, and even then, record labels end up making 30 points or less net margin. There's a huge difference between the net and the gross in an industry with such a large retail channel.
"... sue teenagers and grand parents for using Kazaa and/or exchanging music MP3s on P2P."
They named one teenager (because the teenager's mother had put her daughter's name on the paperwork when signing up for broadband) and I recall them naming one woman who happened to be a grandmother, and who turned out not to even own a PC. Is that the person you're talking about? They didn't sue her.
Either way, I'm not sure what you mean -- should there be upper and lower age limits for being subject to copyright law?
The problem I see with that approach is that it provides a huge loophole... any household would only need transfer their cable, DSL, DirectTV bills, and so on, into the name of a minor or an elderly person. Regardless of what you think of the law, loopholes like this are not fair.
"I dont know if theres some clause somewhere in something about using copyrighted materials in education, maybe not, but its certanly not an issue if a teacher makes a copy of something out of a book to pass out to the class..."
You're talking about fair use doctrine, and, yes, Xeroxing a magazine article and distributing it to a class is a typical example of educational use that is indeed in the domain of fair use. You're correct there.
Similarly, distributing CD-R's of a piece of music to a music class might also fall under fair use.
But, the fellow in the article was claiming that he should not be held liable for the > 1,000 files in the family PC's Kazaa share directory because, among other things, his daughter had downloaded some tracks at a teacher's request. This is, frankly, slippery-slope bullshit and he's being an idiot. He was sharing files indiscriminately with the Internet at large.
I have no issue with fair use doctrine; in fact, I think it rocks. I have an issue with idiots who falsely claim that educational fair use covers their actions when they should know better.
Reading his court filing (the link's in the original article) yields more chuckles; in another instance, he states that since the record companies had failed to shut down Kazaa, then he was free to interpret its very existence as evidence that sharing files via Kazaa is legal. Much in the same way, I reckon, that if the police haven't yet eradicated illegal drug sales, then people who buy cocaine should be exempt from the law.
You can place anybody else in the roles of plaintiff and defendant and it would still work the same.
Say, for example, somebody wrongs you in some way that causes you financial harm. Pick any example you like. Perhaps they built your house incorrectly. Perhaps they destroyed your car. For whatever reason, you feel that it is your moral imperative to them.
You don't want to go through a lengthy court process, but you do feel that you should be compensated in some way, so you can at least have a moral victory. So you offer to settle for less than what you feel you are legally owed.
If you feel that this, too, is extortion even when you're the plaintiff, fair enough -- but this is how things work.
"First, if they are willing to settle for such a small amount, why are the fines so high to begin with. Wouldn't it be more efficient to set fines at a appropriate level in the first place? It is very arguable that such high fines were created to allow extortion."
It's extremely common practice to sue for the maximum amount that the law allows. Even individuals, in addition to entities like the RIAA, regularly do this. Suing for a lesser amount opens you up to some risks: the court might find that the damages are even less than the reduced amount, and it sets a precedent. If you sue ten people for five thousand bucks and sue the eleventh guy for a half a million bucks for doing approximately the same thing, your position is weakened.
"Second, why do they want to settle so badly? It seems like they would want some percentage of the cases to go to court to establish that these people actually violated copyright. As it stands, it would be very reasonable to assert that they are randomly choosing people, and then extorting money from them."
I'm not sure we would want it otherwise. If the plaintiffs don't offer a settlement and instead force the defendants into litigation, then it can get much, much worse for the defendant, and even more of a PR issue for the record companies. Many defendants do have a few thousand bucks lying around for a settlement. Most do not have the tens of thousands of dollars that litigation might cost.
Offering to settle does not prevent a defendant from taking it to court if they so desire. Either way it's entirely the defendant's choice. Beating the defendant in litigation where the defendant chose to litigate has the same net result, and the RIAA's image is perhaps tainted a bit less than if they hadn't offered a settlement.
"Maalouf's attorneys noted that downloading through Kazaa was openly discussed at Maalouf's daughter's school by teachers, and they downloaded songs used in classes. That should be a protected fair use of the music, the attorneys said."
First, I really wonder if the teacher said "now, put thousands of songs in your Kazaa share directory." They got nailed for apparently sharing lots and lots of copyrighted material with Internet users at large without authorization, not for downloading a song or two at the behest of a teacher.
At any rate, helping yourself to a copy of Photoshop because you need it for a class project isn't "protected fair use" (although, sensibly, Adobe and many other software companies do often take steps for students to legally get software at less than retail cost), and neither is downloading a song. Did the teacher mislead them into thinking that massive music piracy was legal? Fine; sue the teacher. But it's no excuse to break the law.
There are plenty of legitimate ways to fight back against the recording industry (as the main subject of the article is doing), but this defense is just plain silly.
"Recording companies essentially provide artists with high-risk loans, but decide how they spend it and how much by selling them their own services of recording, marketing, and distribution."
High risk for the record company. It's the record company's money that's on the hook if a CD fails.
"The artist has little control over where money goes or even over their own music, and in the end they don't even own their own creations."
The recording, for which the record company covered the costs of production, typically ends up being the property of the label. Not the lyrics and the music. That's an important distinction.
Record companies typically get exclusive rights to distribute a recording in exchange for funding the recording. This is understandable, as it must sell the recording to cover the expenses. This model would not work very well if a record company paid for $25K of studio time but did not have exclusive rights; there'd be nothing preventing you from putting the music on Kazaa yourself. If you want to own your recordings, pay for the studio time yourself, and distribute it yourself in any manner you see fit. This is entirely your choice. If you don't happen to have the money to make your own recordings, this is certainly unfortunate, but it's probably not some evil record company's fault.
"As a result of the companies' self-interests in spending on their own services, prices for recordings are artificially high and the artist doesn't get much of it."
This is typical of the lack of control you get when you spend other people's money. If you're an Internet startup and you get VC money, the VCs are going to want to tell you what to do. Such is the priveledge of people who have money.
As an artist you always have the option of producing, distributing, marketing and selling your work on your own. Doing it yourself, rather than leaving it to professionals who have resources much greater than yours, may not ultimately garner the same financial reward, and you take all the financial risk (rather than the record company) and you must come up with the funds (rather than the record company), but at least you'll get the satisfaction of doing it yourself and ultimately be responsible for your own success or failure.
It is because each artist has this choice that we should not be tempted to use "record companies are unfair to artists" as a mantra for rationalizing piracy. The inequity between those who have money and those who don't is present in just about every business.
"Would they really lose money at $10 - $13 per CD?"
FWIW, the average price of a new CD is down to $13.50 in the US.
Most record companies operate on margins that are low compared to many other industries. The record company sees only about $8 of the $13.50 you pay, as that's the price at which they sell into distribution. Net margin on CDs is typically below 30%. Many folks who make the "but it costs less than a buck to press!" argument aren't taking into account all the costs of producing, promoting and selling a CD.
Additionally, the record industry is a speculative one. One huge hit can pay your bills for a year, and cover the losses you incur on all the other releases that don't recoup their expenses. But if you go long enough without a hit, your label may go the way of Geffen Records.
"However, I do believe that there is an economic max/min equation that would show that there is some point at which a lower price brings in enough of an increase in sales to maintain profitability."
Not to be a smartass here, but I mean it absolutely literally when I say that this is Economics 1A. It is called the supply/demand curve. The music industry understands this, which is why music prices have been more or less constant for the past 40 years. If anything, they've gone down -- back in the early 80's, $9.99 was a bargain for an LP; that's $17.30 in today's dollars.
Naturally the explosion in piracy over the past few years is having a major effect on the supply/demand curve. Say what you like about the recording industry, but you can be absolutely sure that the accountants for each record company are putting on the green eye shades and working out scenarios for new pricing strategies and tactics in a world where piracy is a dominant force.
"So, you're stating, that it is OK to steal a physical item and, thereby, depriving the proprietor of the establishment the return on their investment (they paid for the item) of their option to persue you as a criminal, simply because you legitimaty purchased there perviously?"
My post was a reply to an earlier one in which the poster was fearful that the recording industry's "sue your customers" outlook may spread to other industries. In my post, I pointed out that it already has.
The attitude of the recording industry, the software industry, grocery stores, and department stores appears to be "we don't care if you're a customer. If we think you're breaking the law and causing us harm, we're liable to go after you. We're not going to look the other way because you may have bought from us in the past."
Whether or not this is a good attitude to have is left to the reader.
"It has become cemented into general mindset, by propaganda, that it is always illegal to copy or distribute any creative work that is copyrighted."
I only wish that this were true. Perhaps people would have been scared away from downloading the new Unreal demo the other day and I might have actually been able to get my copy.
Seriously, though, I've never heard anybody expressing concern over downloading the Acrobat Reader from the Adobe site, or a Windows XP patch, or viewing a movie trailer online, because it's copyrighted. download.com and the shareware sites seem to be as popular as ever. Have you any anecdotal evidence of this happening?
"when you see an industry suing their customers, i can't wait till this spreads to other industries."
It's already worse than that: if you shoplift from a store, you're liable to be fined or even thrown in jail, even if you're a regular customer of that store. You may have spent $500 in that store in the past year, but you help yourself to one item of clothing or one can of tuna without paying for it, and all of a sudden they forget that you're a customer. Maybe you were going to recommend that pair of pants or that can of tuna to your friends, and generate more sales for the store. Or maybe you were going to go back to the store and give them money if it turned out you liked them. There's just no benefit of the doubt nowadays.
It happens in the world of software, too. Google on "criminal copyright infringement" and you'll find links to cases where people have been indicted and even thrown in jail for copying software. Who's to say that they weren't also customers? After all, if I'm going to run a counterfeit Microsoft software copying ring, I've got to start with at least one legally bought copy of the software. Likewise, if I put 1,000 songs in my Kazaa share directory for download and let pretty much anybody help themselves to them without paying for them, I might be sued -- even though there's the chance that I might have bought one of those CDs, thus making me a customer.
It appears that the "this person may have bought from us in the past, thus we should look the other way when applying the law" rationale is already a dead concept.
"if this is the direction for capitalism then i give society another 20years max before very bad things start to happen."
It would appear that bad things are already happening.
"I wouldn't say you have lost out, since the people that downloaded your book would probably not have been willing to pay your book in the first case."
I think this is too large an assumption to make. It really depends on the person and the media.
Analyst firms -- folks who are paid to research these things -- are quick to make statements like "the [insert media here] industry loses [insert dollar amount here] annually to piracy." On the opposite side, many slashdotters believe, and would have you believe, that piracy actually helps media creators and they're just too dumb to see this. And then I have overheard conversations in Best Buy like "Dude, don't buy that! I'll just burn you a copy!". In these instances, the addressee didn't reply "Great idea, and if I like your burned copy, I'll come back here and buy it." To be clear, the point was to save money by not buying it, and not to do a "try before you buy" sort of deal or otherwise engage in something that would end up helping to pay the artist's rent. And I'm pretty sure the artist's landlord could not be paid with the assurance that some Kazaa users really liked their work but had opted not to pay for it.
The bottom line is that if the absolute size of your market is x, if subset y people use piracy as a "try before you buy" method and end up contributing to your market size, and subset z of your potential market uses piracy as a "save money" method and do not pay you, if z exceeds y then you're losing. x, y and z are variables in the best sense, as nobody can predict what they'll be for any given piece of work.
"I'm not sure exactly what you think you have lost, perhaps the right to control distribution of the media exactly as you wish?"
Being able to control how one's works are distributed is a luxury that shouldn't be understated. In many cases it makes the difference between being able to eat and pay the rent, or not. In a perfect world, artists should just concentrate on creating, yadda yadda, but there's something to be said for having an income. If making money is important to you and me, we shouldn't assume it isn't important to anybody else.
"I live my an independent music store that recently shut down due to a Best Buy open up right next door."
Incidentally, this is how the record companies got nailed for price-fixing a few years back:
The big box stores (Best Buy, etc.) started selling CDs at little or no profit as an incentive to bring customers into the store (where they'd presumably also buy a high-margin item at the same time).
Smaller vendors, as expected, freaked out and complained to the record companies.
The record companies starting using a mechanism (already common in many other industries) called MAPS, or Minimum Advertised Prices, or MAPs. Retailers who sold their wares had to agree to not advertise CDs below a certain price -- they could sell them for any price they want, but not advertise them. This was done to help protect the "little guys" who didn't have a metric buttload of high-margin CE devices in the back of the store and thus couldn't slash prices on CDs as a draw.
The big box retailers complained to the government.
The record companies stopped doing MAPs. Meanwhile, lots of other merchandise in your local Best Buy is sold with a MAP arrangement -- the difference is that nobody's complained to the government. Yet.
Smaller retailers who can't compete on price continue to go out of business, as covered in the article.
Some slashdotters -- those of you who'll be hurrying to mod this down -- (correctly) point out that record companies have been nailed for price fixing; thus they are corrupt evil greedy bastards, and (incorrectly) thus it is morally okay to use Kazaa for this reason. Two wrongs making a right, and all that.
"Complete with such bullshit stories as "the RIAA is sueing a 12 year old girl." No, buddy. Unless that 12 year old girl had a credit card and her own ISP account, the IP adress pointed at the _mother_, not at the girl. Just the mother pushed the girl in front, to play the public sympathy card. And, shamefully enough, won."
In that case, for some reason, the mother had signed up for DSL service in her daughter's name.
Which, of course, opened things up for a huge pity party. "The RIAA is suing 12-year-old girls!" became a rallying cry. You can imagine how the slashdot crowd would have ran with it if she, say, had put her dog's name on the application.
But the same thing could happen to any of us. If a business did you wrong -- say, the dry cleaner down the street -- and all else failed and you had to take them to court, if said business had (again, for whatever reason) registered the ownership in a minor's name, you'd be equally liable to have that "you're suing a 12-year-old!" claim thrown at you.
"Did they think they had a slew of mp3s sitting around on cds in their homes?"
Actually, yeah, that's probably something that they're hoping to find. That's because it would smash Kazaa's "we think copyright infringement is deplorable and we don't want our network being used for it" stance.
If the folks at Kazaa are smart, they're not partaking in all the unauthorized copyrighted content that's so readily available on their own network. We shall see.
"However, if you are saying that the creators of the filesharing networks are responsible, then the logical extension of your argument would be to say that the builders of the alleys should be held resposible for the actions of those who occupy their creations."
That's a slippery slope. The thing to understand is that Kazaa was built, and operates, to facilitate copyright infringement. Kazaa needs copyright infringement. It's how they get the traffic to sell the ads which pay their salaries. If, magically and suddenly, all unauthorized copyrighted material were to disappear from the network tomorrow, 99% of its users would stop using it, and they would have no business. That 1% of you who really are using P2P to get your Linux distros simply would not be enough traffic for them to sustain their operation.
Yes, I know that the Sharman folks keep parroting the line about how copyright infringement is just awful and it's just unfortunate that a few bad apples might be using the network for an unintended purpose, but -- let's face it -- they are lying. It is sad when I see so many/.'ers buying into that lie.
Sharman are no white knights. They are no freedom fighters. They are in it to make a buck, just like most people.
True true. Another way to look at it is that most people you (and I mean the generic "you") will hire off the street will be familiar with Windows, but not with Linux. If that $180 XP Pro license costs you less than the hours it would take to train the employee to learn whatever Linux shell you've chosen along with the open source accounting program that you downloaded from SourceForge, then XP is the way to go.
And if you find yourself saying "Candidate A is less qualified, but they are familiar with this open source spreadsheet software I picked up that was written by those German teenagers," then you're incorrectly focusing on the short term vs. the long term.
Just as you would not pay your employees to attend a mandatory daily prayer meeting, you would not want to sacrifice their efficiency by forcing them to (figuratively) kneel at the altar of Linus and Richard. You have a business to run.
Slashdot Mirror
I think it's plainly obvious by reading the comments that the vast majority of Slashdotters would only ever use DVD X Copy for backing up a DVD that they already own. They would not use it for, say, renting a DVD from Netflix and making a copy for themselves, as many of my friends do regularly. Then again, almost everybody I know who uses Kazaa uses it to download and share copyrighted material without the holder's permission, so perhaps I'm hanging with the wrong crowd.
Making backups of your media is a good idea, in case they're damaged or stolen. But not even factoring in the cost of the DVD burner or the blank media, the basic version of DVD X Copy retails for $69.99. That's the cost of three DVDs.
I must own over a hundred DVDs, and not once have I had a DVD go bad or otherwise become unusable. I would have to have had three instances of this happening in order for a purchase of DVD X Copy to have been worth the investment.
If I regularly loaned DVDs to friends and three ended up not coming back, the software would have been a good investment, but it would have been more efficient to be more careful in whom I loan my DVDs to.
It seems to me that the most logical way to get your value's worth out of DVD X Copy is to use it for piracy. Just as most people use Kazaa illegally and most people who buy equipment for getting free cable or satelite signals also do so to avoid paying, rather than for "test purposes" or "for educational use only" as the ads proclaim, my bet is that most people who use DVD X Copy do so illegally.
Does anybody dispute this?
Thank you for being honest. I know several people who do the same. I'd have to guess that this is the primary application for DVD X Copy; while some people really do use it to make backups of stuff they own, it's similar to the people who use Kazaa only to download music from unsigned bands and shareware. Or people who buy cable descrambling equipment just to save on equipment rentals.
"Anybody who thought this lawsuit would accomplish anything other than making a few scumwad lawyers rich was a naive fool."
On the contrary, it was extremely successful -- people just don't understand why the suit came about, and what it meant.
Due to the success of the suit, the record companies are no longer allowed to set MAPs, and Wal-Mart and Best Buy are now free again to run ads for CDs at loss-leading prices. It wasn't about what price that stores were able to sell at, but about what prices they could advertise. The record companies set MAPs to protect smaller retailers. It all transpired a couple of years ago and the checks are just now being mailed.
The biggest effect of this action is that Wal-Mart and Best Buy will continue to dominate the retail market for CDs, because they can afford to sell CDs at margins that smaller stores simply cannot support to survive. This action is great news for the Wal-Marts and Best Buys of the world, and great news for consumers, as long as they buy from stores like Wal-Mart and Best Buy. It's not-so-good news for specialty retailers, ranging from the Tower Records chain (who were busted along with the record companies and have recently filed for bankruptcy), to the indie record stores. Wal-Mart can afford to sell a CD for $10.99 or $11.99 because they'll make the money back on the other stuff you'll buy while you're there. Your favorite local indie record store cannot.
Not to sound overly dramatic, but if your favorite local indie record store has gone out of business or is on the ropes, the results of this price-fixing lawsuit may have a lot to do with it. Enoy your $13.86, folks. See you at Wal-Mart.
"They've only won one for the continuing death of middle-class businesses and made another step towards a world where you're either a huge corporation or a rightless consumer. People are generally too stupid to understand that it's in the long term bad for them if they buy at Wal-Mart. Markets have to be regulated in some way."
Very astute. But many Slashdotters are getting their $13, and perhaps we didn't need specialty retailers like Tower Records anyway, when we can just go to Wal-Mart and get our (edited for our protection) CDs and our underwear at the same time. Plus, as a bonus, it's perceived by many commenters as a victory against record companies (when in reality the record company makes about the same no matter what store they sell to). It's a bit like a few years back when we all got the $300 "tax refund" and people were practically wetting themselves. Those who saw the big picture and the possible long-term effects of the country spending money it doesn't have were often derided as spoil-sports.
"Come on, kids, this is a no-brainer. As Steve and Phil told us at the very beginning, and as reality has proven - THERE IS NO MONEY IN SELLING DOWNLOADABLE TRACKS."
Steve Jobs said that Apple is not making money on iTunes. This is a very long stretch to "there is no money in selling downloadable tracks." There are tons of variables:
And a bunch of other stuff we can't know, and assumptions we can't make.
"Startup with massive launch budget declared to be not profitable" is hardly news. Stretching this to declare that the business has no hope is relying on too many unknowns.
"Why would HP deal with Napster? Song distribution does not bring any money. In fact, Apple claimed (in an old article on TheRegister.co.uk; sorry for no URL) that their iTunes online store did not bring any profit."
I think people are extrapolating way too much from Jobs' statement. When he stated that they were breaking even on iTunes and making the bulk of their money on the iPod, lots of Slashdotters have assumed:
Those who've run a business know that these are groundless assumptions. Extrapolating "song distribution does not make any money" based on a statement that Jobs made about Apple's own unique business many not be accurate.
"I bought about 200 CDs during the time when they were convicted for price fixing and over charging by up to $5 per CD. So, having been robbed of $1,000 in late 1990's dollars, I am offered $13.86 in 2004 dollars. Woo fucking hoo."
There's a lot of misunderstanding of what happened here. A lot of people think this has to do with the margin that the record companies charged channel-wide. Reading the original article does provide some of the details, but it doesn't cover everything. I posted the below as a response to another message but I think it bears repeating. The article covers the basics: also named were Tower Records, TWE and MusicLand. Why just those three?
Set the way-back machine to the early days of the 21st century...
Putting this in black-and-white terms for /. readers, in this case the "bad guys" were the record companies, as well as TWE, Tower Records, and MusicLand, who originally complained to the record companies regarding unfair competition from the big box retailers. The "good guys" are Best Buy, Wal-Mart, and the other large retailers who used CD sales as a little-or-no margin incentive to bring customers into the stores. I am generally not a fan of Wal-Mart and its business practices, but in this case, they've won one for the free market economy.
The price fixing affected what you paid if (a) you bought those 200 CDs Tower Records, MusicLand, etc. who kept their prices high in a (sometimes successful) effort to stay in business. If, like many other people, you shopped around for the lowest price, then it's less of an issue.
By the way, if a manufacturer sells an item into the distribution channel for a fixed price (for CDs, it tends to be around $8), if the retailer marks it up by 10%, 20% or even 100%, it does not affect how much the original manufacturer made when they sold it to the distributor. I'm not privy to the price that record companies sell in to Wal-Mart vs. specialty retailers, but the price difference between stores is often more about the store's profit margin, not the manufacturer. For the record companies, this was less about how much they made per CD, and more about protecting their retailers, so that they could ultimately sell more CDs.
I think it's time for some background on the price fixing situation. I think a lot of people commenting on this story have a misunderstanding of what happened:
If I understand your post correctly, I think you're of the understanding that the record companies conspired to keep prices high channel-wide, thus it is ironic of them to be suing people for copyright infringement.
Regardless of record industry profit margins, channel programs such as MAPs, and so on, they have the same right to protect their investment that you and I do. I run a business myself, and (like most business owners I know), I charge the highest price that the market will bear. Whether I am simply being "greedy" or I am indeed trying to provide the best life I can for me and my family is an issue open to debate, but by following this practice, I haven't forfeited my legal or moral right to protect my intellectual property any more than a record company or any other business has. If somebody copies my code, steals from me, tries to cheat me, and so on, I'll kick their ass right proper using any legal means available. My profit margin has absolutely no bearing on this.
"I purchased well over 50 CDs in my lifetime. I get back $13? From my quick calculations I feel that I should be getting back about $300 instead."
Only if you bought all fifty at TWE, Tower Records or MusicLand, and you haven't bought any CDs in the past two years. If you've largely bought the CDs elsewhere, the price fixing didn't affect you.
"I figure that CDs should be no more than $6.00/ea (before tax) so I should get back at least 50% of the money I spent."
Do you think it's possible to be profitable selling a CD for $6.00? CDs are sold into distribution at about eight bucks, and even then, record labels end up making 30 points or less net margin. There's a huge difference between the net and the gross in an industry with such a large retail channel.
"... sue teenagers and grand parents for using Kazaa and/or exchanging music MP3s on P2P."
They named one teenager (because the teenager's mother had put her daughter's name on the paperwork when signing up for broadband) and I recall them naming one woman who happened to be a grandmother, and who turned out not to even own a PC. Is that the person you're talking about? They didn't sue her.
Either way, I'm not sure what you mean -- should there be upper and lower age limits for being subject to copyright law?
The problem I see with that approach is that it provides a huge loophole... any household would only need transfer their cable, DSL, DirectTV bills, and so on, into the name of a minor or an elderly person. Regardless of what you think of the law, loopholes like this are not fair.
"I dont know if theres some clause somewhere in something about using copyrighted materials in education, maybe not, but its certanly not an issue if a teacher makes a copy of something out of a book to pass out to the class..."
You're talking about fair use doctrine, and, yes, Xeroxing a magazine article and distributing it to a class is a typical example of educational use that is indeed in the domain of fair use. You're correct there.
Similarly, distributing CD-R's of a piece of music to a music class might also fall under fair use.
But, the fellow in the article was claiming that he should not be held liable for the > 1,000 files in the family PC's Kazaa share directory because, among other things, his daughter had downloaded some tracks at a teacher's request. This is, frankly, slippery-slope bullshit and he's being an idiot. He was sharing files indiscriminately with the Internet at large.
I have no issue with fair use doctrine; in fact, I think it rocks. I have an issue with idiots who falsely claim that educational fair use covers their actions when they should know better.
Reading his court filing (the link's in the original article) yields more chuckles; in another instance, he states that since the record companies had failed to shut down Kazaa, then he was free to interpret its very existence as evidence that sharing files via Kazaa is legal. Much in the same way, I reckon, that if the police haven't yet eradicated illegal drug sales, then people who buy cocaine should be exempt from the law.
You can place anybody else in the roles of plaintiff and defendant and it would still work the same.
Say, for example, somebody wrongs you in some way that causes you financial harm. Pick any example you like. Perhaps they built your house incorrectly. Perhaps they destroyed your car. For whatever reason, you feel that it is your moral imperative to them.
You don't want to go through a lengthy court process, but you do feel that you should be compensated in some way, so you can at least have a moral victory. So you offer to settle for less than what you feel you are legally owed.
If you feel that this, too, is extortion even when you're the plaintiff, fair enough -- but this is how things work.
"First, if they are willing to settle for such a small amount, why are the fines so high to begin with. Wouldn't it be more efficient to set fines at a appropriate level in the first place? It is very arguable that such high fines were created to allow extortion."
It's extremely common practice to sue for the maximum amount that the law allows. Even individuals, in addition to entities like the RIAA, regularly do this. Suing for a lesser amount opens you up to some risks: the court might find that the damages are even less than the reduced amount, and it sets a precedent. If you sue ten people for five thousand bucks and sue the eleventh guy for a half a million bucks for doing approximately the same thing, your position is weakened.
"Second, why do they want to settle so badly? It seems like they would want some percentage of the cases to go to court to establish that these people actually violated copyright. As it stands, it would be very reasonable to assert that they are randomly choosing people, and then extorting money from them."
I'm not sure we would want it otherwise. If the plaintiffs don't offer a settlement and instead force the defendants into litigation, then it can get much, much worse for the defendant, and even more of a PR issue for the record companies. Many defendants do have a few thousand bucks lying around for a settlement. Most do not have the tens of thousands of dollars that litigation might cost.
Offering to settle does not prevent a defendant from taking it to court if they so desire. Either way it's entirely the defendant's choice. Beating the defendant in litigation where the defendant chose to litigate has the same net result, and the RIAA's image is perhaps tainted a bit less than if they hadn't offered a settlement.
I liked this part of the article:
"Maalouf's attorneys noted that downloading through Kazaa was openly discussed at Maalouf's daughter's school by teachers, and they downloaded songs used in classes. That should be a protected fair use of the music, the attorneys said."
First, I really wonder if the teacher said "now, put thousands of songs in your Kazaa share directory." They got nailed for apparently sharing lots and lots of copyrighted material with Internet users at large without authorization, not for downloading a song or two at the behest of a teacher.
At any rate, helping yourself to a copy of Photoshop because you need it for a class project isn't "protected fair use" (although, sensibly, Adobe and many other software companies do often take steps for students to legally get software at less than retail cost), and neither is downloading a song. Did the teacher mislead them into thinking that massive music piracy was legal? Fine; sue the teacher. But it's no excuse to break the law.
There are plenty of legitimate ways to fight back against the recording industry (as the main subject of the article is doing), but this defense is just plain silly.
"Recording companies essentially provide artists with high-risk loans, but decide how they spend it and how much by selling them their own services of recording, marketing, and distribution."
High risk for the record company. It's the record company's money that's on the hook if a CD fails.
"The artist has little control over where money goes or even over their own music, and in the end they don't even own their own creations."
The recording, for which the record company covered the costs of production, typically ends up being the property of the label. Not the lyrics and the music. That's an important distinction.
Record companies typically get exclusive rights to distribute a recording in exchange for funding the recording. This is understandable, as it must sell the recording to cover the expenses. This model would not work very well if a record company paid for $25K of studio time but did not have exclusive rights; there'd be nothing preventing you from putting the music on Kazaa yourself. If you want to own your recordings, pay for the studio time yourself, and distribute it yourself in any manner you see fit. This is entirely your choice. If you don't happen to have the money to make your own recordings, this is certainly unfortunate, but it's probably not some evil record company's fault.
"As a result of the companies' self-interests in spending on their own services, prices for recordings are artificially high and the artist doesn't get much of it."
This is typical of the lack of control you get when you spend other people's money. If you're an Internet startup and you get VC money, the VCs are going to want to tell you what to do. Such is the priveledge of people who have money.
As an artist you always have the option of producing, distributing, marketing and selling your work on your own. Doing it yourself, rather than leaving it to professionals who have resources much greater than yours, may not ultimately garner the same financial reward, and you take all the financial risk (rather than the record company) and you must come up with the funds (rather than the record company), but at least you'll get the satisfaction of doing it yourself and ultimately be responsible for your own success or failure.
It is because each artist has this choice that we should not be tempted to use "record companies are unfair to artists" as a mantra for rationalizing piracy. The inequity between those who have money and those who don't is present in just about every business.
"Would they really lose money at $10 - $13 per CD?"
FWIW, the average price of a new CD is down to $13.50 in the US.
Most record companies operate on margins that are low compared to many other industries. The record company sees only about $8 of the $13.50 you pay, as that's the price at which they sell into distribution. Net margin on CDs is typically below 30%. Many folks who make the "but it costs less than a buck to press!" argument aren't taking into account all the costs of producing, promoting and selling a CD.
Additionally, the record industry is a speculative one. One huge hit can pay your bills for a year, and cover the losses you incur on all the other releases that don't recoup their expenses. But if you go long enough without a hit, your label may go the way of Geffen Records.
"However, I do believe that there is an economic max/min equation that would show that there is some point at which a lower price brings in enough of an increase in sales to maintain profitability."
Not to be a smartass here, but I mean it absolutely literally when I say that this is Economics 1A. It is called the supply/demand curve. The music industry understands this, which is why music prices have been more or less constant for the past 40 years. If anything, they've gone down -- back in the early 80's, $9.99 was a bargain for an LP; that's $17.30 in today's dollars.
Naturally the explosion in piracy over the past few years is having a major effect on the supply/demand curve. Say what you like about the recording industry, but you can be absolutely sure that the accountants for each record company are putting on the green eye shades and working out scenarios for new pricing strategies and tactics in a world where piracy is a dominant force.
"So, you're stating, that it is OK to steal a physical item and, thereby, depriving the proprietor of the establishment the return on their investment (they paid for the item) of their option to persue you as a criminal, simply because you legitimaty purchased there perviously?"
My post was a reply to an earlier one in which the poster was fearful that the recording industry's "sue your customers" outlook may spread to other industries. In my post, I pointed out that it already has.
The attitude of the recording industry, the software industry, grocery stores, and department stores appears to be "we don't care if you're a customer. If we think you're breaking the law and causing us harm, we're liable to go after you. We're not going to look the other way because you may have bought from us in the past."
Whether or not this is a good attitude to have is left to the reader.
"It has become cemented into general mindset, by propaganda, that it is always illegal to copy or distribute any creative work that is copyrighted."
I only wish that this were true. Perhaps people would have been scared away from downloading the new Unreal demo the other day and I might have actually been able to get my copy.
Seriously, though, I've never heard anybody expressing concern over downloading the Acrobat Reader from the Adobe site, or a Windows XP patch, or viewing a movie trailer online, because it's copyrighted. download.com and the shareware sites seem to be as popular as ever. Have you any anecdotal evidence of this happening?
"when you see an industry suing their customers, i can't wait till this spreads to other industries."
It's already worse than that: if you shoplift from a store, you're liable to be fined or even thrown in jail, even if you're a regular customer of that store. You may have spent $500 in that store in the past year, but you help yourself to one item of clothing or one can of tuna without paying for it, and all of a sudden they forget that you're a customer. Maybe you were going to recommend that pair of pants or that can of tuna to your friends, and generate more sales for the store. Or maybe you were going to go back to the store and give them money if it turned out you liked them. There's just no benefit of the doubt nowadays.
It happens in the world of software, too. Google on "criminal copyright infringement" and you'll find links to cases where people have been indicted and even thrown in jail for copying software. Who's to say that they weren't also customers? After all, if I'm going to run a counterfeit Microsoft software copying ring, I've got to start with at least one legally bought copy of the software. Likewise, if I put 1,000 songs in my Kazaa share directory for download and let pretty much anybody help themselves to them without paying for them, I might be sued -- even though there's the chance that I might have bought one of those CDs, thus making me a customer.
It appears that the "this person may have bought from us in the past, thus we should look the other way when applying the law" rationale is already a dead concept.
"if this is the direction for capitalism then i give society another 20years max before very bad things start to happen."
It would appear that bad things are already happening.
"I wouldn't say you have lost out, since the people that downloaded your book would probably not have been willing to pay your book in the first case."
I think this is too large an assumption to make. It really depends on the person and the media.
Analyst firms -- folks who are paid to research these things -- are quick to make statements like "the [insert media here] industry loses [insert dollar amount here] annually to piracy." On the opposite side, many slashdotters believe, and would have you believe, that piracy actually helps media creators and they're just too dumb to see this. And then I have overheard conversations in Best Buy like "Dude, don't buy that! I'll just burn you a copy!". In these instances, the addressee didn't reply "Great idea, and if I like your burned copy, I'll come back here and buy it." To be clear, the point was to save money by not buying it, and not to do a "try before you buy" sort of deal or otherwise engage in something that would end up helping to pay the artist's rent. And I'm pretty sure the artist's landlord could not be paid with the assurance that some Kazaa users really liked their work but had opted not to pay for it.
The bottom line is that if the absolute size of your market is x, if subset y people use piracy as a "try before you buy" method and end up contributing to your market size, and subset z of your potential market uses piracy as a "save money" method and do not pay you, if z exceeds y then you're losing. x, y and z are variables in the best sense, as nobody can predict what they'll be for any given piece of work.
"I'm not sure exactly what you think you have lost, perhaps the right to control distribution of the media exactly as you wish?"
Being able to control how one's works are distributed is a luxury that shouldn't be understated. In many cases it makes the difference between being able to eat and pay the rent, or not. In a perfect world, artists should just concentrate on creating, yadda yadda, but there's something to be said for having an income. If making money is important to you and me, we shouldn't assume it isn't important to anybody else.
"I live my an independent music store that recently shut down due to a Best Buy open up right next door."
Incidentally, this is how the record companies got nailed for price-fixing a few years back:
"Complete with such bullshit stories as "the RIAA is sueing a 12 year old girl." No, buddy. Unless that 12 year old girl had a credit card and her own ISP account, the IP adress pointed at the _mother_, not at the girl. Just the mother pushed the girl in front, to play the public sympathy card. And, shamefully enough, won."
In that case, for some reason, the mother had signed up for DSL service in her daughter's name.
Which, of course, opened things up for a huge pity party. "The RIAA is suing 12-year-old girls!" became a rallying cry. You can imagine how the slashdot crowd would have ran with it if she, say, had put her dog's name on the application.
But the same thing could happen to any of us. If a business did you wrong -- say, the dry cleaner down the street -- and all else failed and you had to take them to court, if said business had (again, for whatever reason) registered the ownership in a minor's name, you'd be equally liable to have that "you're suing a 12-year-old!" claim thrown at you.
"Did they think they had a slew of mp3s sitting around on cds in their homes?"
Actually, yeah, that's probably something that they're hoping to find. That's because it would smash Kazaa's "we think copyright infringement is deplorable and we don't want our network being used for it" stance.
If the folks at Kazaa are smart, they're not partaking in all the unauthorized copyrighted content that's so readily available on their own network. We shall see.
"However, if you are saying that the creators of the filesharing networks are responsible, then the logical extension of your argument would be to say that the builders of the alleys should be held resposible for the actions of those who occupy their creations."
That's a slippery slope. The thing to understand is that Kazaa was built, and operates, to facilitate copyright infringement. Kazaa needs copyright infringement. It's how they get the traffic to sell the ads which pay their salaries. If, magically and suddenly, all unauthorized copyrighted material were to disappear from the network tomorrow, 99% of its users would stop using it, and they would have no business. That 1% of you who really are using P2P to get your Linux distros simply would not be enough traffic for them to sustain their operation.
Yes, I know that the Sharman folks keep parroting the line about how copyright infringement is just awful and it's just unfortunate that a few bad apples might be using the network for an unintended purpose, but -- let's face it -- they are lying. It is sad when I see so many /.'ers buying into that lie.
Sharman are no white knights. They are no freedom fighters. They are in it to make a buck, just like most people.
True true. Another way to look at it is that most people you (and I mean the generic "you") will hire off the street will be familiar with Windows, but not with Linux. If that $180 XP Pro license costs you less than the hours it would take to train the employee to learn whatever Linux shell you've chosen along with the open source accounting program that you downloaded from SourceForge, then XP is the way to go.
And if you find yourself saying "Candidate A is less qualified, but they are familiar with this open source spreadsheet software I picked up that was written by those German teenagers," then you're incorrectly focusing on the short term vs. the long term.
Just as you would not pay your employees to attend a mandatory daily prayer meeting, you would not want to sacrifice their efficiency by forcing them to (figuratively) kneel at the altar of Linus and Richard. You have a business to run.